In­dus­try cap­tains want lo­cal cur­rency

Chronicle (Zimbabwe) - - Business Chronicle - Se­nior Busi­ness Reporter

THE Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) has im­plored the Gov­ern­ment to ur­gently con­sider in­tro­duc­ing a lo­cal cur­rency as part of broader ini­tia­tives to im­prove liq­uid­ity in the econ­omy.

Zim­babwe has been suf­fer­ing liq­uid­ity short­ages af­ter adopt­ing a mul­ti­c­ur­rency sys­tem in Fe­bru­ary 2009.

The coun­try aban­doned the Zim­bab­wean dol­lar at the height of in­fla­tion in favour of a mul­ti­ple cur­rency sys­tem, which is dom­i­nated by the United States dol­lar as the main medium of ex­change.

Since April this year, the coun­try has been hit by cash cri­sis, which the Re­serve Bank of Zim­babwe (RBZ) Gover­nor Dr John Man­gudya has among oth­ers at­trib­uted to the for­eign ex­change mal­prac­tices such as ex­ter­nal­i­sa­tion.

In its man­u­fac­tur­ing sec­tor sur­vey re­port re­leased on Wed­nes­day, CZI re­vealed that RBZ should also con­sider in­tro­duc­ing a lo­cal cur­rency to en­sure cash cir­cu­la­tion.

The in­dus­trial rep­re­sen­ta­tive body also rec­om­mended the use of plas­tic money, which is al­ready be­ing im­ple­mented.

The cen­tral bank has been on a cru­sade urg­ing the trans­act­ing pub­lic to use plas­tic money and elec­tronic pay­ment sys­tems to ease cash short­ages.

In­dus­try cap­tains also sug­gested pro­mo­tion of for­eign di­rect in­vest­ment and de­posits, proper man­age­ment of bank­ing sys­tem, cre­ation of con­fi­dence in the econ­omy as well as adopt­ing the South African rand.

It in­di­cated that ca­pac­ity con­straints im­pact­ing on in­dus­trial pro­duc­tiv­ity in­cluded low de­mand for do­mes­tic prod­ucts, liq­uid­ity cri­sis, com­pe­ti­tion from im­ports, draw­backs from cur­rent economic en­vi­ron­ment, high cost of do­ing busi­ness, and short­age of raw ma­te­ri­als.

“Seventy-eight per­cent face com­pe­ti­tion from both lo­cal com­pa­nies and for­eign com­pa­nies, 20 per­cent from do­mes­tic firms only and two per­cent do not face any com­pe­ti­tion,” said CZI in the re­port.

The re­port shows that ca­pac­ity util­i­sa­tion in the man­u­fac­tur­ing sec­tor has im­proved by 13.1 per­cent to 47,4 per­cent from 34,3 per­cent achieved last year.

Fol­low­ing the lib­er­al­i­sa­tion of the econ­omy in Fe­bru­ary 2009, the Gov­ern­ment and the pri­vate sec­tor con­tinue to work on ef­forts to stim­u­late pro­duc­tiv­ity to com­pet­i­tive lev­els.

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